Animal Spirits in Woodford and Reichlin Economies: The Representative Agent Does Matter
AbstractMacroeconomic dynamic models are often criticized because the households’ behavior is summarized by a representative agent and, then, they do not take into account consumers’ heterogeneity. Reconsidering the Woodford (1986) infinite-horizon model and the Reichlin (1986) OLG model, we show that the representative agent can be a good representation of heterogeneity in preferences, in order to study the local dynamics and the occurrence of endogenous fluctuations.
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Bibliographic InfoPaper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 05-01.
Length: 10 pages
Date of creation: 2005
Date of revision:
Endogenous fluctuations; heterogeneous preferences; representative agent;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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